Hot on the heels of the news of extension of Direction on the two UCBs- Mumbai based the Needs of Life Co-op Bank and Kolhapur based Shivam Sahakari Bank last week, the news of yet another two UCBs getting penalized by RBI, is grabbing the media attention.
They are Millath Co-operative Bank and Thiruvaikundam Co-operative Urban Bank. They have been slapped with a penalty of Rs 10 lac and Rs 5 lac respectively for flouting the terms of Directions imposed on them by the regulator RBI.
Millath Co-operative Bank was faulted for non-adherence to and violation of All-Inclusive Directions and other directions imposed on the bank. This penalty has been imposed under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949.
This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, says RBI in the press release.
The discrepancies were revealed during the inspection report of the bank based on its financial position as on March 31, 2019 and its related to permission of withdrawals in excess of the stipulated amount and sanctioning of fresh loans and advances in violation of directions.
Based on the same, a Notice was issued to the bank advising it to show cause as to why the penalty should not be imposed for non-compliance with the directions. After considering the bank’s reply RBI felt the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.
In the case of the Thiruvaikundam Co-operative Urban Bank, it was discovered that the UCB flouted the Direction on issues of RBI’s prohibition of loans and advances to Directors. The inspection report of the bank based on its financial position as on March 31, 2019 revealed that the bank had sanctioned loans to its Directors in contravention of the directions issued by Reserve Bank of India (RBI) in this regard.
Based on the same, a Notice was issued to the bank advising it to show cause as to why the penalty should not be imposed for non-compliance with the directions. After considering the bank’s reply, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.
